Third of businesses hurt by credit crisis: NABE

WASHINGTON (MarketWatch) -- A third of businesses surveyed across the country said that tightening credit conditions have affected their business, the National Association of Business Economics said Sunday.

The potential spillover of the weak housing sector and the financial market turmoil are key unknowns in the economic outlook over the next several quarters.

While over half of the financial sector's firms surveyed said the credit crunch was having a negative impact on their business, the survey also found that 45% of goods producing firms said there was a negative impact.

Only 22% of the services firms surveyed said they had experienced difficulty.

Federal Reserve Chairman Ben Bernanke has said monetary policymakers have to rely more on anecdotal information about the economy because the government data is not timely enough to assess the impact of the credit crunch. See MarketWatch's complete coverage of Fed

Business caution about the outlook may be a factor in whether the Fed cuts interest rates again at its next meeting on Oct. 30-31.

Sara Johnson, managing director at Global Insight, said that the survey found that business activity, capital spending and hiring slowed in the third quarter as a result of tightening credit conditions and a rapidly deteriorating housing market.

"The housing market outlook turned from bad to worse: an overwhelming 98% of respondents expect a further slowdown in housing activity," Johnson said.

A majority of respondents believes the slowdown will be substantial, she added.

But firms were split on how the housing slump will impact their business. Almost half of the respondents in each sector said the slump would have an impact, while the other half said that it wouldn't.

In the survey, 52% of respondents expect real GDP growth of 0-2% in the second half of the year. This is up from 24% in the last survey in July.

About 40% expect growth in the 2%-3% range, down from 62% in the previous survey.

"The good news is that respondents expect the economy to keep expanding, with both employment and capital spending rising - albeit more slowly than anticipated three months ago," Johnson said.

But more than half of survey panelists said they were more pessimistic about the outlook.

Greg
Robb

Greg Robb is a senior reporter for MarketWatch in Washington. Follow him on Twitter @grobb2000.

Intraday Data provided by SIX Financial Information and subject to terms of use. Historical and current end-of-day data provided by SIX Financial Information. All quotes are in local exchange time. Real-time last sale data for U.S. stock quotes reflect trades reported through Nasdaq only. Intraday data delayed at least 15 minutes or per exchange requirements.